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Income Taxes | 12 Months Ended
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Dec. 30, 2017
Income Tax Disclosure [Abstract] |
Income Taxes |
Note 22. | Income Taxes
On December 22, 2017, the President enacted the Act, which, beginning in fiscal 2018, will reduce our corporate statutory rate from 35% to 21%, repeal the domestic manufacturing deduction, and increase certain permanent differences. As a result of the impacts of the Act, the SEC provided guidance that allows the company to record provisional amounts for those impacts, with the requirement that the accounting be completed in a period not to exceed one year from the date of enactment. As such, the company’s financial results reflect the income tax effects of the Act for which the accounting is complete, and provisional amounts for those specific income tax effects of the Act for which the accounting is incomplete, but a reasonable estimate could be determined. Our estimate of the deferred tax benefit due to the revaluation of our net U.S. deferred tax liabilities is a provisional amount under the SEC’s guidance. Due to the different federal income tax rates in effect for fiscal 2017 (35%) and fiscal 2018 (21%), timing differences that are estimated balances as of the date of enactment and year-end will result in changes to our estimate of the deferred rate change when those estimates are finalized with the filing of the 2017 income tax return. Since many of the year-end deferred tax balances include estimates of events that have not yet occurred, such as payments expected to be made during 2018 that are deductible on the 2017 tax return, these amounts are not certain and the impact of the tax rate change cannot be finalized. During fiscal 2017, we recorded a $48.2 million provisional discrete tax benefit from revaluing our net U.S. deferred tax liabilities to reflect the new U.S. corporate tax rate. The company also recognized a provisional reduction to current tax expense of approximately $8.3 million attributable to pension contributions and bonus depreciation on certain assets placed into service during fiscal 2017 offset with a corresponding income tax expense of $0.7 million for the impact on the 2017 domestic manufacturing deduction. These provisional adjustments resulted in a decrease in income taxes payable of $7.6 million. The income tax effects for these positions require further analysis, and the ultimate impact may differ from these provisional amounts due to this analysis, changes to estimates, additional regulatory guidance that may be issued by federal or state jurisdictions, changes in interpretations and assumptions the company has made, and actions the company may take because of tax reform. This analysis is expected to be completed in the second half of fiscal 2018. The company’s provision for income tax expense (benefit) consists of the following for fiscal years 2017, 2016 and 2015 (amounts in thousands):
|  | Fiscal 2017 |  |  | Fiscal 2016 |  |  | Fiscal 2015 |
Current Taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 53,076 |  |  | $ | 86,235 |  |  | $ | 75,128 |
State |  |  | 7,403 |  |  |  | 13,983 |  |  |  | 10,419 |
|  |  | 60,479 |  |  |  | 100,218 |  |  |  | 85,547 |
Deferred Taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (59,385 | ) |  |  | (11,656 | ) |  |  | 16,236 |
State |  |  | (1,921 | ) |  |  | (2,801 | ) |  |  | 2,057 |
|  |  | (61,306 | ) |  |  | (14,457 | ) |  |  | 18,293 |
Income tax expense (benefit) |  | $ | (827 | ) |  | $ | 85,761 |  |  | $ | 103,840 |
Income tax expense (benefit) differs from the amount computed by applying the applicable U.S. federal income tax rate (35%) because of the effect of the following items for fiscal years 2017, 2016, and 2015 (amounts in thousands):
|  | Fiscal 2017 |  |  | Fiscal 2016 |  |  | Fiscal 2015 |
Tax at U.S. federal income tax rate |  | $ | 52,253 |  |  | $ | 87,338 |  |  | $ | 102,560 |
State income taxes, net of federal income tax benefit |  |  | 3,564 |  |  |  | 7,266 |  |  |  | 8,556 |
Tax reform impact |  |  | (48,160 | ) |  |  | — |  |  |  | — |
Section 199 qualifying production activities benefit |  |  | (5,422 | ) |  |  | (8,007 | ) |  |  | (6,725 | )
Net share-based payments windfalls* |  |  | (1,001 | ) |  |  | — |  |  |  | — |
Other |  |  | (2,061 | ) |  |  | (836 | ) |  |  | (551 | )
Income tax expense (benefit) |  | $ | (827 | ) |  | $ | 85,761 |  |  | $ | 103,840 |
* | Applied beginning in fiscal 2017 upon adoption of new guidance.
In 2017, the most significant differences in the effective rate and the statutory rate is the revaluation of net deferred tax liabilities resulting from the Act. Absent the Act, the most significant differences in the effective rate and the statutory rate are state income taxes offset by reductions for the Section 199 qualifying production activities deduction. Deferred tax assets (liabilities) are comprised of the following (amounts in thousands):
|  | December 30, 2017 |  |  | December 31, 2016 |
Self-insurance |  | $ | 4,972 |  |  | $ | 7,051 |
Compensation and employee benefits |  |  | 8,836 |  |  |  | 13,512 |
Deferred income |  |  | 8,705 |  |  |  | 10,893 |
Loss and credit carryforwards |  |  | 13,453 |  |  |  | 19,556 |
Equity-based compensation |  |  | 6,831 |  |  |  | 11,890 |
Hedging |  |  | 2,754 |  |  |  | 676 |
Pension and postretirement benefits |  |  | 13,344 |  |  |  | 27,537 |
Intangible assets |  |  | 2,707 |  |  |  | 4,548 |
Other |  |  | 9,657 |  |  |  | 16,801 |
Deferred tax assets valuation allowance |  |  | (111 | ) |  |  | (18 | )
Deferred tax assets |  |  | 71,148 |  |  |  | 112,446 |
Depreciation |  |  | (47,552 | ) |  |  | (75,569 | )
Intangible assets |  |  | (104,597 | ) |  |  | (179,491 | )
Other |  |  | (1,975 | ) |  |  | (3,240 | )
Deferred tax liabilities |  |  | (154,124 | ) |  |  | (258,300 | )
Net deferred tax liability |  | $ | (82,976 | ) |  | $ | (145,854 | )
The company has a deferred tax asset of $4.0 million related to a federal net operating loss carryforward which we expect to fully utilize before expiration. Additionally, the company and various subsidiaries have a net deferred tax asset of $6.2 million related to state net operating loss carryforwards, and $3.1 million for credit carryforwards with expiration dates through fiscal 2036. The utilization of a portion of these state carryforwards could be limited in the future; therefore, an insignificant valuation allowance has been recorded. Should the company determine at a later date that certain of these losses which have been reserved for may be utilized, a benefit may be recognized in the Consolidated Statements of Income. Likewise, should the company determine at a later date that certain of these net operating losses for which a deferred tax asset has been recorded may not be utilized, a charge to the Consolidated Statements of Income may be necessary. The gross amount of unrecognized tax benefits was $1.3 million and $1.8 million as of December 30, 2017 and December 31, 2016, respectively. This change is due to the expiration of the statute of limitations on several previously unrecognized tax benefits. These amounts are exclusive of interest accrued and are recorded in other long-term liabilities on the Consolidated Balance Sheet. If recognized, the $1.3 million (less $0.3 million related to tax imposed in other jurisdictions) would impact the effective rate. The company accrues interest expense and penalties related to income tax liabilities as a component of income before taxes. No accrual of penalties is reflected on the company’s balance sheet as the company believes the accrual of penalties is not necessary based upon the merits of its income tax positions. The company had an accrued interest balance of approximately $0.1 million and $0.2 million at December 30, 2017 and December 31, 2016, respectively. The company defines the federal jurisdiction as well as various state jurisdictions as “major” jurisdictions. The company is no longer subject to federal examinations for years prior to 2015, and with limited exceptions, for years prior to 2013 in state jurisdictions. The following is a reconciliation of the total amounts of unrecognized tax benefits for fiscal years 2017, 2016 and 2015 (amounts in thousands):
|  | Fiscal 2017 |  |  | Fiscal 2016 |  |  | Fiscal 2015 |
Unrecognized tax benefit at beginning of fiscal year |  | $ | 1,754 |  |  | $ | 727 |  |  | $ | 2,107 |
Gross increases |  |  | — |  |  |  | 1,488 |  |  |  | — |
Lapses of statutes of limitations |  |  | (495 | ) |  |  | (461 | ) |  |  | (1,380 | )
Unrecognized tax benefit at end of fiscal year |  | $ | 1,259 |  |  | $ | 1,754 |  |  | $ | 727 |
At this time, we do not anticipate significant changes to the amount of gross unrecognized tax benefits over the next twelve months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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